Have You Chosen The Right Bookkeeping Software For Your Business?

Part of digitising your business is choosing the right software that can help your bookkeepers get tasks done. Find the right software is comparable to finding a needle in a haystack if you do not have some criteria. Some software may have great features, but they come with a price tag. Others are less expensive, but they let quality take a backseat. The first thing you need to look for in bookkeeping software is its ability to offer the best of both worlds: affordability plus quality.

If you want to make an informed decision, you need to follow the right search process. The need for business transformation takes place as your grow your business. Can you still remember the day when you only had to deal with a few tasks? Now that your business is growing, you need to take bookkeeping to the next level, hence, consider the utilisation of bookkeeping software.

There is one thing you need to remember right off the bat: there is no such thing as the best bookkeeping software. You just need to choose the one that suits your needs.

1. Research

If you do not know much about bookkeeping software, doing a research is going to be your best bet. This means you need to start talking to your competitors to find out about the software they are using. You can also ask your bookkeeper or accountant for some suggestions. Once you have taken note of all suggestions, the next step to take is to search about the bookkeeping software. Learn more about the software’s features and functions. You may also opt for a trial version if it is on offer.

2. Decide which software suits your business

Bookkeeping software comes in two types: generic software and industry specific software. In choosing bookkeeping software, you need to know which one will be best for your business. There are features that your business may require so you need to know if you need to stick to generic software or move to industry specific.

3. Take your budget into consideration

Your budget is another criterion to consider when shopping for bookkeeping software. While your choice will depend on your budget, it does not necessarily mean you have focus on the price without checking the features of the software. Make sure you also take your needs into account. Some factors to consider when choosing bookkeeping software are your computer hardware and business requirements.

Bookkeeping software is meant to make your day-to-day tasks easier, but you should also choose the software that is able to provide increased security so you can counter data breaches and threats. Never rush into purchasing the software without doing a thorough research so you can get the most out of your bookkeeping software.

Why Is Time Management Essential For Bookkeepers?

Your efficiency is determined with the way you manage your time. Time management is an ability to finish the task at hand within or less than the allowed period of time. Time is a precious resource and making an effort to plan how you are going to use your time wisely will give you outstanding results. When you are performing your duties, you need time to accomplish them, but you still need to meet the deadline so other tasks do not pile up.

Reasons Bookkeepers Fail To Deliver

Does your bookkeeper consistently miss deadlines? If they do not seem to deliver, you need to find why they cannot keep up. This might due to poor time management. If they get distracted, they really cannot accomplish anything. When your bookkeeper fails to deliver, you may want to consider asking them to create a to-do list. A to-do list is the best time management tool as it gives you an idea of the tasks you need to accomplish. The to-do list will serve as a great reminder for your bookkeeper that they still have some unfinished tasks. The to-do list is not just about writing down your tasks but also planning the time you need to finish the task. This way, you will be able to understand the amount of time you spend to finish all of the tasks.

A Systematic Approach

With the systematic approach, you need to have consistency. This approach will help your bookkeeper develop the habit of planning. It helps them to find out which weeks they will be very busy at. When they get into the habit of planning, they will be able to classify the tasks based on their urgency and importance. It will also be helpful if they write their weekly goals and give importance to task that requires immediate attention. For instance, they need to remind you of the payment that is due next week, this task should be their top priority.

Business owners heavily rely on bookkeeper especially when it comes to payment deadlines. Time management is a skill every bookkeeper should master because it plays a critical role in the overall success of a business. When  you do not give importance to time management, you will find business owners missing payment deadlines and paying penalties and interest.

Bookkeepers must also be flexible with time management changes as these can happen anytime. Being able to adjust is a good sign that your bookkeeper is getting great at planning. While bookkeeping is not an easy task, setting priorities and sticking to deadlines can help your bookkeeper be on the right track.

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How Is Your Relationship With Your Bookkeeper?

If you want to have a productive experience with a bookkeeper, you need to start with establishing a long-term relationship. It is essential for a bookkeeper and business owner to have a good relationship because a bookkeeper holds a long-term role. If you are not meeting half way, your bookkeeper can jeopardise your business. Here are five ways you can build a great relationship with your bookkeeper:

Communicate what you need with your bookkeeper

Whether you just need someone to help you with compliance or a person more familiar with your industry, it is important that your bookkeeper knows what you expect from them. If you want growth opportunities and potential partnerships, it should start with knowing what you need. Be clear with your bookkeeper so they have an idea how you are going to work together.

Create a business plan

You cannot expect your bookkeeper to know what goes on inside your head. You need to create a business plan as this will serve as your bookkeeper’s guide. A business plan also serves as an exercise that will help you anticipate problems and get the right solution. When you make it a habit to regularly discuss your business plan with your bookkeeper, you will keep yourself accountable and focused on your company’s key drivers.

Share your vision with your bookkeeper

If you are planning to expand your business or make a big purchase, do not let your bookkeeper be the last to know. Your bookkeeper should be involved when you are making decisions because they can recommend some great practices that can help you maximise your profit and take your business in the right direction. Your bookkeeper can also provide you some money-saving practices that can help you avoid tax penalties.

Collaborate with your bookkeeper in real time

How can your bookkeeper help you if they do not know your numbers? Real-time collaboration must be kept in mind because your bookkeeper also needs to know how your business is doing. Data-sharing and online collaboration tools are important for this process. These tools enable your bookkeeper to analyse data and provide helpful recommendations when needed.

Organise receipts and invoices

Organising your files enable a bookkeeper to know what is going on with your business. Your bookkeeper will be able to work efficiently if the paperwork they need is available. They will also have an idea how they are going to take care of your daily transactions and may remind you of your payment schedule to avoid penalties.

Why Should Bookkeepers Adopt Cloud Technology?

In this day and age, cloud-based services are undoubtedly sitting on a throne, due to their positive effects on day-to-day tasks. In the past, businesses dread cloud technology because of the cost that it entailed. However, there are cost-effective ways to embrace cloud at reduced cost and this is when many businesses decide to make the switch. Perhaps, you are one of those who is still hesitant to move towards the cloud because for one, you fear the lack of control and cost unpredictability.

Since there are many service providers to choose from, you are not limited to expensive options. In fact, you can choose a cloud-based service that offers flexibility without the price tag. How is cloud technology going to help you with your bookkeeping task? Contrary to popular belief, cloud-based services do not necessarily replace human capabilities because they are designed to increase productivity so more tasks are carried out. Here are some additional benefits you can obtain from cloud:

Accessibility

Monitoring every business transaction is essential to keep your finances intact. However, real-time monitoring will not be possible if you are chained to your desk. With cloud accounting and bookkeeping solutions, being tied to your desktop computer is a problem of the past. Cloud-based bookkeeping gives you the ability to gain complete access to data anytime, anywhere and with any device. All you have to do is to use your smartphone to access the data.

Secure Sharing

Traditional bookkeeping can give you a headache especially when you need to share some information with your accountant, banker and business coach. Cloud technology provides you easier and more secure way of sharing the information without emailing reports or data. As a result, you save more time and ensure that people you want to share your financial report with obtain the information.

Work Online and Offline

Hybrid cloud services offer the best of both worlds. If you are connected to the Internet, you will be able to reap the benefits of online bookkeeping such as sharing with bookkeepers and accountants, centralised data and manage backups. When you sync your data, you will still be able to work offline and maintain productivity.

With the convenience that cloud service offers, business owners should not hesitate to tap into this technology. Aside from keeping your records safe, you will also enjoy full access to your files or data anywhere you go. Your business will also exponentially increase availability with the use of cloud-based software. Aside from saving time and effort, you will also enjoy accurate function that makes record-keeping a breeze.

How Do Businesses Trigger ATO Audit?

A business owner should pay serious attention to every transaction taking place in the company as tax mistakes can trigger an ATO tax audit. According to the ATO’s compliance program, they are going to be more active in reviewing and auditing practices. It is still possible for ATO to select your company for review despite detailed and honest declarations. When it comes to quick audits, the ATO completes an audit within 28 days. However, if it is a complex audit, the process may take up to 3 to 4 years. The process involves face to face meetings with the ATO and the financial records for up to five years will be requested. You may have proven your lodgements correct, the costs incurred are still considered significant. Being aware of the factors that can trigger ATO audit will not only save you from trouble but also help you develop some positive bookkeeping habits for your business.

Poor Record of Lodging Returns

Record-keeping is essential when it comes to filing tax returns. Compliance obligations are as equally important as lodging annual income tax returns by the due date. Compliance obligations may include employee related reporting, activity statements and fringe benefits. Having a good compliance history can improve the ATO’s perception of your business.

Not Paying the Right Amount of Superannuation to Employees

If you have failed to pay your employees the right amount of superannuation, they are going to complain to the ATO that will trigger a review or audit. The same is true when you fail to pay superannuation on time. These audits are considered a review of superannuation guarantee obligations, but it can also escalate to fringe benefits, GST and income tax audits. When you have not appropriately managed these processes, the ATO will audit your business.

Discrepancies with the Information You Lodged With the ATO

This is the most common triggers of an ATO audit or review. Some discrepancies may include BAS and Payment Summaries on gross wages and PAYG withholding, income tax return and BAS on total expenses and sales and an income tax return and an FBT return on employee benefit contributions.

International Transactions

Your business should also focus on international transactions because the ATO also considers this as a key area of focus. Some examples are transactions with international related parties, materials funds transfers in and out of Australia and transactions with tax havens. These transactions can raise a red flag and one way you can manage the risk is by devising defensive strategies.

Tax Mistakes That Can Put Your Business In Peril

If you are afraid of incurring additional expenses, you will surely allow bookkeeping to take a backseat and carry every responsibility for your business just to save money. However, skimping on bookkeeping, would mean that your business is not immune to mistakes and it can certainly affect your business during tax time. There are many mistakes that small business owners often commit but these three are the most common.

Late payments

Some business owners make a payment when they file their tax returns but this is a common mistake many businesses commit. Owners are supposed to make quarterly estimated tax payments and should be mindful of the due date. When payments are not made in a timely manner, you can trigger an audit from the ATO and this will result in paying tax penalties and interest charges once you file your tax return.

Misclassifying employees

Determining whether an individual should be considered a contractor or an employee is not as complicated as some small business owners may think. You will need to take a few points into consideration because misidentifying a person can lead to interest for non-payment and penalties in terms of employment taxes.

Poor Record keeping

Although you might be tempted to make a mental note of every transaction for the belief that you can retrieve information instantaneously, this habit can do more harm than good. There are instances when businesses mix personal with business expenses and this can really spell trouble. When you rely on bookkeeping in a shoebox, it can have a serious effect on your business as there is no way to find out whether the numbers on your report are accurate. The numbers can either be lower or higher than the expenses you have incurred.

These mistakes can still be corrected by ensuring that you keep tabs on entertaining and travel expenses. So long as business was discussed, you can deduct the cost but you need to write notes on the receipt and indicate the people you were meeting with and the business that was discussed. When it comes to filing, you can also ask for an extension if you need more time. However, extra time to file will also mean extra time to pay. You need to set your expectations because you will surely owe money and you need to estimate the money you owe for the extension. It is quite challenging to keep track of your business but you cannot afford to make these mistakes as they can impact your taxes.

What Does Your Financial Health Look Like?

It is not enough that you run a profitable business as you have to make sure that you keep an eye on your business’s financial health. There are some key questions that you need to answer for you to verify if it is time to make some changes to your current business strategies. Your business may be doing well, but without a financial statement to give you an idea of your financial standing will still result in business losses.

Do you accomplish your monthly goals?

One indicator that you are on the right track is when you hit your monthly targets. You can determine if you are ahead or behind your monthly goals by comparing your month-to-date sales. Your expenses with your end-of-month goals are also worth checking because they also play an important role in your business. This technique can be used for you to find out if it wise to grow your business.

Are you falling behind your payment schedule?

Your accounts payable and cash balance must also be taken into consideration and a profitable business does not give you an assurance that you have nothing to worry about. Keep in mind that a profitable company also runs out of cash, but you can still prevent problems with payment schedule by ensuring that you keep your monthly burn rate and major payables in check. With this technique, you will be able to pay your bills on a regular basis.

Do you have a steady cash flow?

If your business always faces problems with cash flow, this is a cause for alarm because a negative cash flow can greatly affect your business. Problems with cash flow indicate that you are not regularly monitoring your expenses. You can prevent issues with cash flow by tracking monthly ongoing expenses and making a comparison of last month’s actuals to your projections. Make sure you involve your bookkeeper in your discussion so you will have an idea if there are still some parts of your business that needs improvement.

Is your cash enough to keep the business on its feet?

Having enough to get to break-even is also essential because this is deemed as a major milestone where adjustment and regular monitor are required. Your net profit and business plan projections must be checked regular as these can give you a better picture of your financial health. A bookkeeper should prepare a financial statement for you to review. If you do not have enough cash, cutting your expenses is one way to raise additional cash.

5 Tips For Organising Receipts For Tax Time

If you are a savvy business owner, you will surely know the importance of keeping receipts. As you spend hours organising receipts, you will realise that the effort and time you dedicate pay off because these receipts can save your tax return from being in peril. While receipts may just be a piece of paper, it is considered valuable and should be taken seriously because it serves as audit protection. If you do not comply with the strict substantiation requirements of the ATO, it can create a problem in the future especially if you do not have records to prove that the expenses you incurred are indeed business-related.  You may end up left out in the cold if you fail to follow rules.

1.    Keep your receipts

Without a doubt, keeping all receipts cannot be overstated. Receipts are going to play an important role when arguing with the ATO because receipts are going to be your credible evidence. When you argue with the ATO without showing credible evidence that the expenses you incur was business-related, arguing will cost you more money and time.

2.    Scan receipts and keep them for future audit

The ATO may request for documentation and audit you up to six years so it is worth keeping your receipts at least six years so you will no longer face issues during an ATO audit. If you scan your receipts, make sure you keep a back-up as hard drive crashing can be inevitable. Once the ATO makes an audit and you have no evidence to present, they will definitely not buy your excuses.

3.    Indicate on receipts about their business purpose

If you have entertainment or dining expenses, it is a good idea to make notes of their business purpose. It is hard to remember why you went to dinner at a restaurant two years ago but if you have already made notes of the purpose, there is no need to panic.

4.    Keep a daily journal for your business

Although it may be an additional task that can contribute to your busy schedule, keeping a daily business journal can be a huge help especially when you need track some expenses you incurred in the past. Never underestimate the daily journal because they can save you from paying tax penalties.

5.    Don’t rely on cancelled checks and credit card statements

Although these are important they can still be considered insufficient without receipts. Receipts are going to be ideal for bookkeeping purposes because these are the details that are considered essential by the ATO auditor.

The Role Of Bookkeeper In Growing Your Business

Growing your business is a tough decision as you need to look at all of the aspects of your business. Business growth is a sign that you are doing good at managing your business, but just like other successful companies, it requires team effort to accomplish your business goals. A bookkeeper is essential in every business. You will not realise their importance until you decide to grow your business.

More cash and reduced debts

A streamlined invoicing system is one of the benefits of hiring a good bookkeeping service. You are not ready to grow your business if you have trouble improving the flow of money into your business. When you help your bookkeeper, you will be able to get help in reminding your clients for their payments for the products and services that your business has provided. Aside from keeping your cash flow in check, a bookkeeper can also help you reduce the risk of cash shortfalls by helping you deal with credit control.

Good decision making

Although bookkeepers are not the ones to decide for you, they are going to be a big help when it comes to preparing accurate and error-free financial reports. These financial reports will help you make decisions for your business. Business owners refer to the financial reports when it comes to analysing if the business is performing better than the previous months. When the financial reports tell you where your business is heading, it will not be impossible for you to grow your business.

Resolved financial issues

It is inevitable for businesses to face financial challenges but a good bookkeeper can help you handle challenges. A bookkeeper provides financial data analysis and identifies issues that affect the development of your business. A good bookkeeper can also present tailored solutions that can resolve financial challenges.

Running your business is no walk in the park let alone growing it. However, if you have a good bookkeeper to help you put a good bookkeeping system in place, the goal of growing your business will not be impossible to accomplish. This is why as you decide to hire a bookkeeper, make sure you take qualifications into consideration so you will not end up choosing the wrong bookkeeper. While it can be challenging to hire a suitable bookkeeper for your business needs, taking time to get to know a prospective bookkeeping professional can help you make a sound decision. Even if it is only a small business, a reliable bookkeeper can make a difference.